| Accordion_This (Little Upsilon) | Friday, March 4, 2011 - 10:17 am 
If you are planning to run a CEO-based economy, 0% tax is always more lucrative than any other tax rate. Why?
Well, a CEO is always going to invest in a 0% tax country rather than a 10 or even 5% tax country. This is because he/she stands to make more money in the 0% tax country because there is no tax burden. So 0% tax is more useful than any other tax rate in attracting CEOs to your country.
You also make more money from a factor outside tax called "Country Resources Used" than you would ever make from tax, even if your tax rate is 100%. Here's an example from a 75% tax country:
(from Profit/Expenses of Corporation for 1 month)
Country Resources Used 1,435.57M SC$ (this is paid to the country)
(from Cash Flow Data for one month)
Tax Paid (to country) -191.39M SC$
So you're actually making 10 times as much money from the former than you are from tax, even at 75% tax rate.
So let's weigh up the two options. Option A is a tax rate over 0%. Option B is a tax rate of 0%.
Using Option B, you stand to lose a great deal of CEO investment for a gain of around an extra 1/10 of Country Resources Used.
Using Option A, you stand to lose that extra 1/10 of your Country Resources Used in exchange for massive CEO investment.
Or, to put it differently: I was investing in the Kingdom of Northumbria - until he told me he was changing his tax rate to 75%. He'll now lose that investment (and the $1B a month I was paying him) in exchange for a possible gain of around $100M on any corporation that doesn't leave.
My theory: in a CEO-based economy, 0% tax is always best. Thoughts? |
| Linebacker Six | Friday, March 4, 2011 - 11:00 am
If one is seeking outside investment, for whatever reason, then absolutely.
If one is using one's own CEO corporations, then not necessarily. |
| NiAi (Little Upsilon) | Friday, March 4, 2011 - 12:47 pm
0% tax is just to increase liklyhood of investment. But if you have a high welfare nation, even a tax rate of 10-20% can be quite tolerable (even thou we greedy CEO would LOVE 0% tax ofc).
Unless there is mathematical proof of 0% tax generating more income than like 5% tax, with same level of CEO investment, the tax discussion(tax break) is just a method of luring CEOs in, not a profit maximising technique.
Im yet to find a CEO refusing to invest cause' of taxrate of 10% or so, cause finding a active president with high welfare is worth sooo much more (as you know high welfare -> more production-> more profit). |
| Danny Miller (Little Upsilon) | Friday, March 4, 2011 - 01:53 pm
0% tax is best if you want other CEO's to invest.
However, if you good at running corps, I would suggest filling your country w/ your own corps instead. |
| Accordion_This (Little Upsilon) | Friday, March 4, 2011 - 02:19 pm
NiAi and Linebacker, you make good points. My argument, however, is still valid - avoid high tax rates if you want to increase investment.
Also, it's easier for a corporation to make a higher gross profit (and therefore more Country Resources Used) without tax, because tax lowers the capacity of the corporation to upgrade, pay workers, and purchase supplies. Lower tax therefore means faster upgrades and a faster return (possibly even a higher return). |
| Danny Miller (Little Upsilon) | Friday, March 4, 2011 - 03:36 pm
Corp salaries and the welfare index of the country directly affect the level of country resource payments, since that is based on the corps production. Corp taxes would not have a direct effect. High corp tax rates would probably affect the value of the corp and the cash flow as you have stated. Just my 2 cents. |
| Red Dragon (Little Upsilon) | Friday, March 4, 2011 - 08:05 pm
Countries which have many different CEOs will make very stable income, and CEO's corps in the countries must be different corporations. The countries also should have some good state corps such as FMU. In my own opinion, I would like to build my CEO in 30% tax countries with high welfare than in some C3s with poor conditions. |
| swann_88 (Golden Rainbow) | Saturday, March 5, 2011 - 12:49 am
lower taxes also help create a higher p/e ratio in corps allowing them to ipo faster
this applies to both ceo and country corps
so you can benefit from lower taxes even if you have no ceo corps |
